NRZ running at $4m loss monthly

via NRZ running at $4m loss monthly – DailyNews Live 8 July 2014 by Mugove Tafirenyika

HARARE – National Railways of Zimbabwe (NRZ) urgently needs $10 billion for recapitalisation as well as offsetting a $144 million debt owed to service providers and employees.

This came out when officials from the parastatal tendered oral evidence on their operations to the parliamentary portfolio committee on Transport yesterday.

Lewis Mukwada, the NRZ acting general manager, told the Amos Midzi-chaired committee that dilapidated infrastructure, undercapitalisation and competition from road transport had devastated the national rail company.

Parliament heard that NRZ is facing a serious lack of resources to maintain and replace vandalised infrastructure, which has been in use for well over 50 years.

The impact of the inefficiency of the entity has been described by economists as the missing link in the economic growth matrix.

Mukwada said the NRZ was operating at a loss of about $4 million per month yet the company’s wage bill consumes 69 percent of total revenue.

He said the NRZ owed its over 6 000-strong workforce $36 million in salary arrears, which they are settling in 50 percent tranches.

Mukwada said cash was needed to refurbish wagons and related infrastructure.

“The $10 billion is what we need all in all but in the short term, we could do with about $400 million for about three years to start normal operations,” Mukwada said.

“Almost all locomotives have gone beyond their nominal design life with the newest being 21 years old and the oldest at 40. They were all purchased in the 1960s, except for one that we acquired in 1992.”

The committee also heard that NRZ owed NSSA, Zimdef , Zimra and medical aid societies millions of dollars. The parastatal was also failing to pay statutory obligations.

Mukwada, however, said other parastatals such as Grain Marketing Board and Ziscosteel among others also owed them millions of dollars.

“GMB owes us $10 million, Zisco $7,7 million and the Zimbabwe Power Company, our major customer, owes us $2,8 million. We however, owe Zimra $435 million in VAT and paye,” Mukwada told legislators.

He said government had stopped availing funding to NRZ, exacerbating the situation.

He called on Parliament to ensure that the 1997 Railway Amendment Act which sought to transfer the responsibility to maintain the rail infrastructure to government was revived.

With such a state of affairs, the legislators felt that any efforts to resuscitate the firm would be akin to flogging a dead horse as the amounts required were huge for a country struggling to pay its workforce.

The NRZ boss said the Gweru-Harare electric line which supplied power to the electric locomotives had ceased to be operational since 2006.

Mukwada said NRZ’s capacity had been reduced to dangerous levels since 2000, but picked up around 2009. But due to lack of funding from Treasury, there has been no further  growth.

The committee also heard that the economic challenges plaguing companies such as Ziscosteel, Hwange Colliery, among others that do business with NRZ, had impacted on its efficiency.

Mukwada claimed the situation at the parastatal had been worsened by the existence of economic sanctions imposed on the country by western nations.

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